Broadcasters in Black

Why Black-Targeted TV Channels Are Forgoing Cable for Multicast

By R. Thomas Umstead -- Multichannel News, 2/13/2012 12:01:00 AM

African-American viewers recently had a chance to relive soul singer Al Green’s 1972 performance from the culture defining dance and music show Soul Train, part of a hastily developed, seven-hour marathon of the series in tribute to the show’s producer and creator Don Cornelius. He had died three days earlier.

In years past, viewers could only turn on the cable box, to BET or sister network Centric, to see Green sing such classic hits as “Let’s Stay Together,” which was famously crooned by President Obama last month at a Harlem fund-raising event.


REAL ESTATE AVAILABLE

With a plethora of bandwidth due to the expansion of broadcast diginets, network executives say over-the-air multicasting is providing greater opportunities for niche services to gain distribution and reach their target audiences.

National broadcast networks like Bounce TV and Kin TV, as well as regional broadcast services such as The Soul of the South, are betting that gaining carriage on digital channels in markets with large African- American populations will prove to be a better business proposition than waiting for distribution on channellocked cable lineups.

And if those broadcast channels were must-carry channels, then such start-up networks could effectively compete with cable networks like BET or TV One for African-American eyeballs and advertising dollars. The FCC so far has declined to extend must-carry beyond a station’s primary digital channel.

“If they can get [must-carry] distribution on cable systems, it’s a pretty brilliant stroke of strategy to target that bandwidth on the digital spectrum and program that way,” Bob Reid, president of the Africa Channel, an independently owned cable network, said. “With eight, 10 or 20 cities, you can reach a majority of [African-American] viewers.”

Chip Harwood, president of distribution consultant Princeton Media Group, which is working with The Soul of the South, said most multicast pacts are straight barter deals in which the network puts its programming on the channel and the station typically gets some six to eight minutes per hour of local ad avails. The network sells the national time.

“Think of it as almost 24-hour syndication. [The stations] can either sell the time, or return it back to us and we’ll sell it and do a revenue share with them,” Harwood said.

In other situations, Harwood said, the network enters into a lease management agreement in which they purchase the station outright and handle all ad-sales efforts. “Soul of the South will own about 13 of our own stations at launch,” he said.

The newcomer entertainment outlets are hoping to take advantage of the new broadcast-TV shelf space made available with the shift to digital transmission, which provided stations the spectrum to air multiple channels through the same bandwidth that previously carried just one analog signal.

These new diginets are new breeding ground for upstart networks looking to get on the air quickly.

There is an upside for broadcasters, too, as they fight in Washington, D.C., for continued access to broadcast spectrum in the face of the push for wireless broadband (see Rules).

At a press conference at National Association of Broadcasters headquarters last November, launching a new effort by stations to protect their spectrum turf, NAB president Gordon Smith said broadcast-spectrum reclamation could be a threat to the multicast channels that are the best way to get diverse content to minority populations that are disproportionately over-the-air viewers.

HOME FOR DIVERSITY

Andrew Young, a Bounce TV co-founder and former legislator, Atlanta mayor and U.S. ambassador to the United Nations, was prominently featured at the Washington press event, pitching multicast as a way to get diverse voices on the airwaves and attract advertisers who might not be able to afford larger networks.

While that broadcast spectrum has become available, cable-system lineups have tightened. Operators have focused on products with higher margins than video — such as broadband and phone service, mobile video extensions and HDTV — leaving little bandwidth for the launch of new cable networks, and particulary niche-targeted, independent outlets.

Comcast’s pledge to launch two African-American owned-and-operated networks over the next two years on its cable systems — one of which reportedly may be a music service created by hip-hop mogul P. Diddy — per its NBCUniversal merger promise represents one of the few planned launches of such networks so far in 2012.

“We feel like we can better serve a grossly underserved audience specifically by going with a free, over the air service,” Ryan Glover, president of Atlanta-based network Bounce TV, said.

His network targets 25-to-54-year-old African-American viewers mostly with acquired off -network series like 1970s animated series Fat Albert and the Cosby Kids and off -syndication reality series Judge Hatchett, along with well-known movie titles such as Shaft, The Wiz, Lady Sings the Blues and Let’s Do It Again.

Bounce launched in October and has multicast carriage deals with stations representing 53% of the country — and, crucially, reaching 72% of African American households.

Glover said multicasting allowed the network to launch quickly and at far less cost than the typical cable network.

Without having to worry about creating original programming early in the startup phase — a requirement necessary for most new cable networks to gain distribution at launch — the network, backed by civil rights leaders Martin Luther King III and Andrew Young, was able to effectively finance the channel’s launch.

“What we launched our network with was a fraction of the cost that Oprah [Winfrey] launched OWN [with],” he said. As of December 2011, Winfrey’s partner Discovery Communications said it had spent $254 million on OWN.

“The startup costs, the acquisition fees and the original programming slate that you eventually have to delve into for cable drives your expenses up,” Glover said.

Most cable networks, however, enjoy a revenue generating advantage over broadcasters through its double revenue stream of advertising revenue and operator subscriber fees.

Multicast or must-carry broadcast networks typically only have advertising revenue to fall back on.

Glover said that has already drawn inaugural blue-chip advertisers in car makers Toyota, Ford and General Motors, but admits that it will need to increase its footprint to further expand its advertiser opportunities.

“Our advertiser demand has been high and we look to grow our general market partnerships in a very robust way in the very near future,” he said.

Little Rock, Ark.-based Soul of the South hopes to build both national and local ad sales revenue streams with a more regional-focused distribution strategy.

The network, which expects to launch this spring, will targeted Southern cities east of the Mississippi River, where approximately 62% of the U.S. African-American population resides.

“We can do that on 50 channels to get our whole footprint. And there are hundreds of channels within that footprint, so we don’t have to get every station,” Edwin Avent, chairman and CEO of the network, said.

It will offer targeted, as-yet-announced off-network series and movies. “We expect to launch with 25 of those stations and by the end of the year we’ll get to 50 stations.”

While the entertainment-based outlet wouldn’t reveal its full station lineup, the service will launch via broadcast stations in Atlanta (WSKC), Chicago (WOCK), Memphis, Tenn., (WDXT) and Tallahassee, Fla., (WFXU) that have must-carry status on cable systems in those respective markets.

Avent said the network will offer five hours of local news per week, tailored to each market, giving the network local advertising opportunities.

“With the Soul of the South model, the network is counting on national advertising as well as local advertisers, Avent said. “In some of the instances, the local channels that we will broadcast on will sell their own advertising and, in other instances, we will control the local advertising revenue and all of the inventory in that local market.

“We see ourselves more as an NBC or a CBS in that we have the network, but we have the ability to offer local origination programming through news that relates to the viewers.”

FILLING A NICHE VOID

For African-Americans who don’t subscribe to cable and can’t watch BET or TV One, broadcast networks like Kin TV fill a void for targeted content, according to Lee Gaither, president and CEO of the Los Angeles-based programmer.

“A lot of folks depend on local news and broadcast television to get their content, and the notion of providing a broader base of content for those audiences to draw from and not pay for expensive cable bill to know what’s going on in the world is a notion who’s time has come,” he said.

Kin TV will focus on lifestyle programming for 25-to-54- year-old African-Americans, although Gaither would not disclose specific content or distribution deals.

“We’re much more in line to be HGTV, Food [Network] and Travel Channel for African-Americans,” he said.

Bill Carroll, vice president and director of programming for Katz Television Media Group, said the startup broadcast networks have a chance to succeed if they remain true to their mission of serving a niche audience.

“Certainly in markets that have a significant African- American population, it would make sense,” he said. “It’s a good strategy both in terms of where the opportunities are and where they’re likely to get the coverage, making it easier than trying to get a significant channel position on cable. They don’t need coverage in 100% of the country, they just need to have substantial coverage in the markets that make up the majority of the black audience in the U.S.”

For operators targeting African-American viewers, Carroll added, the upstart broadcast networks could provide a more efficient outlet for hyper-targeting than nationally- distributed cable networks like BET and TV One, particularly if they gain cable distribution on must-carry channels that have to be carried by pay TV providers.

Africa Channel’s Reid worries that cable operators who have to carry these channels may elect to drop independent African-American channels like the seven-year-old Africa Channel, which offers entertainment programming and news from the African continent. The independent network has secured carriage in about 10 million homes, notably securing deals with major MSOs Time Warner Cable, Comcast and Cox Communications.

MUST-CARRY SQUEEZE

“There’s room for them in the marketplace, but my concerns and fears for a network like the Africa Channel is that cable systems who are in individual markets required to carry these stations — and they have to eventually pay [retransmission] fees to them — will have less licensing fees available for national cable networks like the Africa Channel,” he said. “That would be unfortunate if that were to occur.”

Soul of the South’s Avent believes that niche broadcast networks could ultimately reach their target viewers with or without cable distribution as more if more viewers cut the cable cord in a still-struggling economy.

“Our research shows that there’s a significant portion of our target market that gets over-the-air television, and with a digital antenna in some markets you can get up to 30 to 40 free over-the-air channels. Those are viewers that [African-American cable networks] will never get.”

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John Eggerton contributed to this story.

MULTICAST UNIVERSE

• There are 4,552 channels being broadcast from 1,726 full-power digital TV stations, up from 2,518 a year ago (an increase of 2,034).

• Those channels include multicast programmers, HD streams and mobile TV.

• More than 600 TV stations are carrying multicast network programming.

• Multicast programmers include Antenna TV, Bounce TV, Live Well, This TV, Me-TV, The Cool TV and The Country Network.

• Spanish-language digital TV channel availability over-the-air has nearly doubled year-over-year to 216 multicast channels and 10 live mobile TV channels.

• Digital-TV players include Hispanic broadcasters Azteca America, Latinoamérica Televisión, Estrella TV, Telemundo, Telefutura and Univision.

• The multicast pioneer was NBC Weather Plus, which aired from November 2004 to December 2008.

SOURCES: SNL Kagan, NAB.org, Broadcasting & Cable